Strategic management applies at all organizational levels. Professionals from top corporate executives to entry-level employees, as well as students considering their leadership pathway, need to think and act strategically about their leadership choices. This is especially true in today’s rapidly changing economic and workplace environment. So what is the best way to translate great business strategy to create great leadership strategy for individuals and high-performance teams?
The Return Driven Strategy framework has been used to analyze how well a company’s strategy is creating long-term sustainable value. It can be adapted as the Leadership Driven Strategy, an effective tool for individual leaders and teams. The Leadership Driven Strategy framework has been applied at companies, business schools, and CFO conferences through a set of diagnostic questions where participants are asked in a Socratic workshop environment to evaluate their value creation strategy (see Figure 1). Here are the core tenets that make up the hierarchy of the Leadership Driven Strategy’s key value-creating activities.
Tenet 1: Ethically Create Maximum Value
- The team has a clear, value-driven mission and operates within the ethical parameters of its constituents to maximize value given its resources.
- The incentives and compensation in the team are highly aligned with ethical conduct and value creation.
Tenet 2: Fulfill Otherwise Unmet Constituent Needs
- The team fulfills needs that are otherwise unmet and are highly valuable to constituents.
Tenet 3: Serve the Right Constituents
- The team leverages genuine assets to target and serve constituents and meet otherwise unmet needs that are valuable/important to them.
Tenet 4: Deliver Offerings
- The team continues to deliver its offerings in the most effective and efficient manner and excels at planning for executability.
Tenet 5: Innovate Offerings
- The team is continuously innovating to improve its offerings and to better fulfill existing and changing constituent needs.
Tenet 6: Brand Offerings
- The team has developed a strong brand identity in the minds and hearts of its constituents.
Tenet 7: Partner Deliberately
- The team partners internally and externally in order to innovate, deliver, and brand its offerings in ways it couldn’t do without partnering.
Tenet 8: Redesign the Value Chain
- The team is continually refining its value chain, which includes external and internal processes that improve responsiveness, service, effectiveness, and efficiency.
Tenet 9: Engage the Team and Others
- The team has highly engaged participants: employees who understand and execute the strategy, partners who understand and are part of that strategy, and constituents whose needs are understood and fulfilled.
Tenet 10: Balance Focus and Options
- The team strikes a balance between the current business (focus) and growth strategies (options).
Tenet 11: Communicate Holistically
- The team communicates internally in a way that clearly communicates the strategy and externally in a way that’s consistent with its values and that strategy.
A FINANCE LEADER’S PERSPECTIVE ON LEADERSHIP DRIVEN STRATEGY
Mark Frigo talks with Kathleen Stokes, senior director of finance at Dole Fresh Vegetables, who has applied the Leadership Driven Strategy framework as a finance leader.
Frigo: In your experience leading a strategic finance team, what are some of the key questions from the Leadership Driven Strategy framework that you believe are most important to focus on?
Stokes: One key question is “How can you innovate your skills, experience, and capabilities to be most valuable?” This can include big improvements like implementing new systems or smaller improvements like tightening up thresholds for investment decisions. It can also include better leveraging tools already in place, such as using Power Pivot in Excel to facilitate automation in reporting. Looking at the same data through different lenses can often lead to new perspectives and insights not seen before.
Frigo: In the current economic environment and with the pandemic impacts on companies, which tenets of Leadership Driven Strategy do you believe have moved to the forefront as priorities for CFOs and strategic finance team members? Which are major challenges?
Stokes: The pandemic has shifted the way we do business. Redesigning the value chain (Tenet 8) was something we had to do literally within days in March 2020. Having the majority of the corporate office workforce work remotely during the pandemic required us to use technology in a different way. Online team video calls became the norm, and other tools were leveraged to share documents, sign contracts, and capture and publish data electronically vs. routing paper. Some of this change was for the better and pushed forward necessary business improvements. For employees who couldn’t work remotely, including critical farm workers in the field, employee safety became paramount and communication even more critical as we learned more about COVID-19. Processes changed often with state and Centers for Disease Control and Prevention guidance, and our brave workforce rose to the challenge to ensure our fresh product was harvested from the fields so it could get to consumers around the world. Another key tenet that’s more in focus now, after the pandemic, is Tenet 9, engage the team and others. As pandemic restrictions have started to lift, employees are now prioritizing their lives differently after some worked remotely for more than a year. Corporate employees are now looking for a different way to work and looking to find more meaning in their work. What might have engaged and excited them just two years ago has changed. To keep our best employees, we need to continue to share the vision of what we do and why we do it and to be flexible in exploring new ways to get work done. At Dole, our mission is to “Make the World a Healthier Place,” and in a post-pandemic world, this now has more meaning than ever.
Frigo: Based on your experience using the Leadership Driven Strategy framework as a finance leader for a strategic finance team, what advice would you give to CFOs in terms of getting started?
Stokes: Read the book Driven: Business Strategy, Human Actions, and the Creation of Wealth by Mark L. Frigo and Joel Litman to learn how to apply the Return Driven Strategy framework to your work. And ask the following important questions: Are we fulfilling unmet customer needs? What is our team brand? Are we continually focused on value creation? Are we fulfilling our deliverables? Are we supporting the key business decisions? Many of the tenets and foundational strategies are common sense, but when you put it all together, it can help teams focus on what’s most important. This can be at a corporate strategy level, on an individual team level, or even at a personal level. I learned this framework at DePaul University more than 15 years ago, and this book is still within arm’s reach on my bookshelf. It stands the test of time for any industry and any role I have been in.
Frigo: Based on your experience with Leadership Driven Strategy, what are the key benefits of using it as a way of thinking for you and a strategic finance team? What is Leadership Driven Strategy to you?
Stokes: Leadership Driven Strategy is a journey, not a destination. It involves thinking beyond the four walls around you to assess how to continually create value. You won’t tackle every tenet every day, but by focusing on what’s most important as a finance leader, you can continually push yourself, your team, and your business to be the best version possible. And it allows you to focus on what’s most important along the way.
The tenets and foundations discussed here can absolutely be applied at the micro level for individual development.